The collapse of the RBS wasn’t directly responsible for the financial mess in which the UK finds itself today but it was certainly one of the turning points in the deep economic recession which continues to grip the nation.

RBS’ then CEO, Fred Goodwin – ‘Fred the Shred’, as he is now known – supplied us with an Icarus story for the modern age – a man who wanted to fly high and fast but who instead burned and crashed in spectacular fashion.

He had enjoyed early successes in his initial years at RBS which made the Scottish bank the world’s largest company in terms of its assets of £1.9 trillion.

Fred Goodwin Former RBS CEO

However, in the continued pursuit of glory, he initiated an aggressive takeover of the Dutch bank ABN AMRO, which was one of the world’s largest financial institutions at the time.

Any business acquisition, however small, should require some form of financial due diligence so, in a deal such as the one involving ABN AMRO, one would have expected there to be a huge amount poring over the financial records and accounts to check whether the investment was as good as it appeared to be.

But, instead, Goodwin allegedly claimed that ABN’s reputable status meant that RBS would only be undertaking a “due diligence light”. After all, at the time, the banking world was enjoying an unprecedented boom, symbolised by the huge salaries that men like Goodwin drew for their role (and his eventual £16 million pension pot).

But, in truth, the first stages of the downturn had already started and ABN had a large exposure of toxic debt in the US sub-prime mortgage crisis. Many say that, with Goodwin’s background as a chartered accountant, the failure to undertake a proper due diligence was an inexcusable oversight. Soon, RBS suffered a liquidity crisis and, in October 2008, it was forced to rely on a Government rescue package.

The moral of the story? All that glitters is not gold. Why let the prospect of an apparently great deal overshadow plain commonsense and financial prudence. Don’t put your livelihood and business success down to chance. Employ a forensic accounting specialist to carry out full and proper due diligence before making substantial business investment decisions.